need not in terms contain an assignment of the debtor's property if possession be given up, or that, if there be an assignment, there must be a delivery of possession in accordance with the terms of the deed. By the terms of this deed the debtor is not bound to give up possession of his property until he makes default in payment of the instalments. That is said to be unreasonable. But against whom? As regards assenting creditors, they are the best judges of what is for their own interest; and if the stipulation is not unreasonable as against them, how can it be so as against non-assenting creditors, who are not in a worse position than assenting creditors. [Channell, B.-There is no inequality between the creditors, and therefore the objection must be confined to unreasonableness, but it may be that the debtor's having possession of his stock in trade will enable him to pay his creditors.] The plea contains no averment that the property retained by the debtor is of greater amount than the debts; therefore it cannot be assumed that there is anything unreasonable in his retaining it. If there had been no cessio bonorum, the deed would not have been unreasonable; then how is it worse because the creditors are in a better position, and have the right, in a certain event, to take possession of the debtor's property? The plea avers that on the execution of the deed possession of all the property comprised in it was given to the trustee. The trustee might, in his discretion, return the property to the debtor in order to enable him to carry on his trade for the benefit of his creditors; and, if so, why may not the creditors provide that the debtor may retain possession of it? The covenant, and not the property, is relied on as the means by which the composition is to be paid. The plea avers that everything has been done to render the deed binding on the plaintiff. If the assignment is illusory, the property did not pass to the trustee, and the deed is 1865. JOHNSON v. BARRATT. 1865. JOHNSON v. BARRATT. EXCHEQUER REPORTS. good on the authority of Clapham v. Atkinson (a).—(He was not called upon to argue the other points (). ) Macnamara, in reply.-First: Clapham v. Atkinson was a mere composition deed, and contained no assignment of the debtor's property. To enable the debtor to retain possession of his property, the deed should have been framed as in Clapham v. Atkinson, or as a deed of inspectorship. This deed, upon the face of it, purports to assign all the debtor's property to the trustee absolutely, and it is an evasion of the statute for the debtor to retain possession of it. The 7th condition means that bonâ fide possession of the property shall be given to the trustee. Practically, the security of the assignment is worthless; for the debtor might dispose of all the property. [Pigott, B.-Suppose there was no cessio bonorum in the deed, and possession of the property was given up to the trustee, and he immediately handed it back to the debtor, would that be lawful ?] It would be a question whether the transaction was bonâ fide or merely colourable. Here the trustee was bound by the terms of the deed to let the debtor retain the possession and control of the property. [Bramwell, B.-Is it not a reasonable construction of the 7th condition of the 192nd section to say that it does not regulate the form of the deed, but only enjoins compliance with its terms, if non-assenting creditors are to be bound by it?] Though a cessio bonorum is not necessary if the deed contains an absolute assignment of the debtor's property, the 7th condition requires that possession of the property should be given up to the trustee. The only limitation is if "the debtor can give or order possession" of it.-Secondly, the deed is bad, because it contains an absolute release (a) 4 B. & S. 730. (b) As to these points, see the argument of Macnamara, infra. without a reservation of rights against sureties. It is not necessary to aver that there are sureties. In Balden v. Pell (a) and Woods v. Foote (b), where a covenant to indemnify the debtor against outstanding bills of exchange was held unreasonable, the plea contained no averment that there were any creditors holding bills. In Keyes v. Elkins (c), where the deed contained a proviso that the release should not prevent any of the creditors from suing any person other than the debtor liable to the payment of any security, Crompton, J., said :-"It is absolutely necessary to hold that a deed which contains a release of the debtor should contain a provision reserving to the creditors their rights and remedies against sureties ;" and Mellor, J., said:" If the remedies against sureties were not preserved, a majority who have only claims against the debtor without any responsible surety might inflict upon the minority, who had claims against the sureties, the greatest injustice in binding them by the deed."—Thirdly, the release is in consideration of the debtor's covenant to pay the composition, not in consideration of its payment, and that is unreasonable. Upon the debtor's default in payment, the trustee may take possession of his property, but there is no covenant by the trustee to pay the creditors, so that their only remedy against him is in a Court of equity. The release should have been conditional on payment of the instalments, or subject to a proviso that in default of payment it should be void: Fessard v. Mugnier (d). By this release the creditors are deprived of their right to sue the debtor for the original debt, and it is useless to sue him for the composition, because, upon his default, the trustee may take possession of all his property. Either the release is absolute, and therefore unreasonable, or if it (a) 5 B. & S. 213. (b) 1 H. & C. 841. (c) 5 B. & S. 240. 1865. JOHNSON V. BARRATT. 1865. JOHNSON 17. BARRATT. EXCHEQUER REPORTS. be construed as conditional it does not dispense with the obligation on the part of the debtor to tender the composition money according to the terms of the deed.-Fourthly, the plea contains no sufficient allegation of tender. It ought to, have been averred that the debtor tendered the first instalment upon or immediately after the day of the date of the registration of the deed: Hazard v. Mare (a), Fessard v. Mugnier (b). It makes no difference that this plea is pleaded by way of equitable defence, because a Court of equity would only grant relief upon payment of the instalments. BRAMWELL, B.-Upon the first point we will take time to consider our judgment. As to the objection that there is no reservation of rights against sureties, it does not appear that there are any sureties, and in the absence of an allegation to that effect we cannot assume that there are. The next objection is that the release is absolute, not conditional upon payment of the composition, and therefore unreasonable. But whatever my opinion may be as to the reasonableness of an absolute release, when the creditors only get a covenant to pay them 5s. in lieu of 20s., I think that is a matter for the creditors themselves to determine. In some cases it may be to their advantage to accept those terms, particularly if they obtain the security of a surety. But, however that may be, the Court cannot say that in point of law it is unreasonable. The remaining objection is, that if the release is conditional the plea should have contained an averment that the first instalment was tendered at the time appointed for its payment; but the answer is, that the release is in terms absolute, and therefore the question does not arise. (a) 6 H. & N. 434. (b) 18 C. B. N. S. 286. MICHAELMAS TERM, 29 VICT. CHANNELL, B.-I am also of opinion that upon the points on which my brother Bramwell expressed his opinion the defendant is entitled to judgment. If the deed is not upon the face of it unreasonable, we cannot assume the existence of rights against sureties so as to make it unreasonable. As to the objection that the deed is unreasonable because the release is absolute, the Courts have held a deed unreasonable where all the creditors are not placed on an equal footing. But no argument has been or could be urged before us that there is any inequality in this case. No doubt a deed may be unreasonable, although there is no inequality between the creditors, as, for instance, where the deed contains some provision which upon the face of it is so unreasonable that the Court cannot give effect to it; but that is not so here. I dissent from the doctrine that because we, sitting as Judges, may, as a matter of private opinion, think a particular provision in a deed unreasonable, therefore we should say, as a matter of law, that the deed is unreasonable and void. Where a deed of this kind is pleaded as a defence, we ought to see whether it can be supported by any rule of construction; and in the case of Garrod v. Simpson (a) we held the deed pleadable in bar as an accord and satisfaction, although it contained no release. As to the last objection, I agree that the release is absolute, and therefore the point as to tender does not arise. PIGOTT, B.-I concur in opinion. With respect to the point as to the reservation of rights against suretics, I have nothing to add to what has been already said. (a) 3 H. & C. 385. 1865. JOHNSON V. BARRATT. |